Congress Extends Flood Insurance Program for Eleventh Time

For the eleventh time since September 2017, Congress has extended the deeply in-debt National Flood Insurance Program (NFIP) without reform. In the interim, five named hurricanes and multiple catastrophic floods, including the ongoing crisis in the Midwest, have wreaked devastation across the United States.
Credit: A Coast Guardsman looks out of a helicopter during search and rescue missions following Hurricane Harvey

For the eleventh time since September 2017, Congress has extended the deeply in-debt National Flood Insurance Program (NFIP) without reform. In the interim, five named hurricanes and multiple catastrophic floods, including the ongoing crisis in the Midwest, have wreaked devastation across the United States to homes, businesses, and public infrastructure. Congress’s continuing inaction to reform the program is exacerbating an already bad situation. Climate change is increasing the nation’s vulnerability to major flood disasters and the NFIP, which plays a central role in the nation’s ability to address this growing threat, is ill-prepared.

Congress must prioritize reform of the flood insurance program

Congress established the flood insurance program to reduce flood damages nationwide. To achieve this goal, the program was designed to do more than simply provide insurance. The program also establishes minimum building and land use requirements for the 100-year floodplain that local communities must adopt in order for their residents to be eligible to purchase NFIP insurance coverage. Further, the program is also responsible for mapping high-risk flood areas, which inform local land use decisions. 

Congress needs to enact meaningful reform—not just repeatedly kick the can. Those reforms should be centered on providing greater buyout assistance, improving disclosure and transparency of flood risk data, and requiring flood maps incorporate future flood projections. 

Homeowners need access to more timely buyouts to escape the cycle of flooding and rebuilding

Through the NFIP, Congress should provide more assistance to help homeowners who would like to move out of harm’s way. Currently, the NFIP places significant emphasis on rebuilding flooded properties—often multiple times—instead of helping homeowners voluntarily relocate out of high-flood risk areas. Nationwide, the NFIP has paid to repair or rebuild more than 30,000 properties an average of five times. As the climate changes and flooding disasters occur more often, the number of families whose properties have flooded and are repeatedly rebuilt by the program is growing. 

To help address this problem, Congress should change the Increased Cost of Compliance (ICC) coverage program to allow buyouts to be an eligible activity. ICC coverage is automatically provided as part of every NFIP policy. It currently provides an additional $30,000 to policy holders to bring a substantially damaged home (i.e. a home that has suffered flood-related damage in excess of 50 percent of its value) into compliance with modern building codes, Often, this is used to elevate a home. However, a relatively simple changes to the NFIP’s ICC coverage provision—namely, increasing the coverage amount and clarifying that voluntary buyouts are an eligible use—could facilitate more efficient buyouts and help families who want to move away from their flood-prone homes. After a buyout, the land would be preserved as open space to help mitigate future flooding. 

Currently, federally financed buyouts can take years to complete, putting this option out of reach for homeowners who can’t afford the wait. Funding buyouts with ICC dollars would simplify and shorten the process and give people more control over their post-flood choices.

Provide homeowners, home buyers, and renters greater access to flood risk data

Homeowners, home buyers, and renters should have a right to know a property’s flood history, insurance requirements, and location in relation to FEMA-designated flood zones. Unfortunately, this information is not easy to access, and often depends on where one lives.

For example, 30 states have either inadequate or no statutory or regulatory flood risk disclosure requirements. Additionally, very little information collected by the Federal Emergency Management Agency (FEMA) through the NFIP, like the number of repetitively flooded properties that are located in a community is made publicly available. This information deficit distorts market signals and hinders fully informed decision-making about how to best avoid or mitigate damaging floods. As such too many homeowners, home buyers, and renters are in the dark about a property’s flood risk. 

As part of NFIP reform, the new Congress should mandate greater disclosure and transparency of flood risk data. Such reforms should include:

  • Nationwide disclosure requirements of flood risk information upon the sale or lease of a property. As a condition of participation in the NFIP, states should be required to enact disclosure laws that provide the following information about flood risk:
    • Whether the home has ever been damaged by a flood and the cost of the damage;
    • Whether the home is located in a 100-year or 500-year floodplain;
    • Whether the seller and/or previous owners ever received federal disaster aid that would require all future owners to obtain and maintain flood insurance on the property
  • A public right-to-know provision. FEMA should be required to create a public data system to share information related to flood damage claims, number of repeatedly flooded properties, and whether communities are properly enforcing local building and zoning codes required under the NFIP. And if FEMA is sharing its information with private insurers, than private insurers should be required to contribute their data to such as system.
  • A homeowner right-to-know provision. Upon request, FEMA should be required to provide homeowners a “right to know” about their property’s past history of flood insurance coverage, damage claims paid, and whether there is a legal requirement to purchase flood insurance because of past owners’ receipt of federal disaster aid.

Require flood maps to incorporate future flood projections

FEMA provides flood maps for more than 22,000 communities across the United States. These maps provide the basis for both flood insurance rates and local building and zoning codes that govern floodplain development by depicting areas that have at least a 1 percent chance of flooding. 

As such, FEMA’s flood maps are the standard developers, emergency managers, property owners, and almost everyone else turn to when designing, siting, and building in the floodplain. However, 58% of all FEMA flood maps are considered inaccurate or out-of-date, according to a 2017 investigation by the Department of Homeland Security’s Inspector General. Such failings are a problem. Communities may locate development in areas that appear safe on the map, but in reality are highly flood-prone. As such, inaccurate and out-of-date flood maps put communities at risk.

Moreover, these maps fail to account for future flood risks that are attributable to sea level rise, increasing incidents of severe weather, and changing development patterns. Development decisions that would appear safe today according to a FEMA map, could still face a serious risk of flooding in the future. As such, FEMA flood maps must not only be accurate and up-to-date, but also forward-looking to better protect people and property, and ensure long-term sustainability of the NFIP. A federal advisory committee, established to review and make recommendations to FEMA on how to improve the mapping program, specifically recommended such an approach.  Congress should set FEMA maps on a glide path to include projections of future conditions to accurately depict flood risk.

The Time for NFIP Reform Is Now

Congress has a duty to reform the program to ensure Americans are not increasingly placed in harm’s way. As sea levels rise and heavy rain storms become more common, coastal and riverine communities can expect increasing vulnerability to flooding. Absent reform, people, property, and the communities in which they are located will only become more vulnerable. Congress is way past the point of when action was needed.